Slag Heap

Ethical Quandaries

In the past couple days, I've come to have newfound respect for John Verbanac -- the political insider who has been at the center of ethics charges directed at Mayor Luke Ravenstahl by challenger Kevin Acklin. Because you have to say this for Verbanac: For a guy with such long arms, he leaves very few fingerprints.

Consider, for example, the allegations that Verbanac has been improperly lobbying state and city officials. At a Kevin Acklin press conference yesterday, Acklin noted that Verbanac had been talking to state Sen. Jane Orie and other officials about the city's pension plan. Verbanac, Acklin alleged, "in effect was lobbying a state senator but doesn't show up as a lobbyist" in state-required lobbying-disclosure forms. (Today's Post-Gazetteaddresses the matter at some length.) Similarly, Acklin cited e-mails showing that Verbanac helping to write Ravenstahl's speeches. Why, Acklin asked, wasn't Verbanac being paid by Ravenstahl's campaign -- just as Acklin pays his own team of writers?

It's easy to see where Acklin is going with this: If neither the city nor the mayor's office cut Verbanac a check, then Verbanac must be expecting to get paid some other way, right? As Bram Reichbaum succinctly asked in a comment on my blog post yesterday, "Shouldn't [Ravenstahl] be paying for [his] own high-octane political consulting? Why do you suppose [Verbanac] is doing this for free?"

The idea here is that pleading the city's pension case, helping massage Ravenstahl's public image ... all of these could be efforts to build up a store of goodwill. And then, when Verbanac needs something from the city -- like, say, a tax subsidy for a project he's developing -- he can call in his markers. In politics, after all, cash is only one form of currency.

The problem, though, is that cash is the only form of currency the law effectively tracks. Whatever else we learn from Acklin's accusations, we're learning just how slippery political influence can be.

In general, to be considered a lobbyist, you have to get paid -- and usually by somebody else. The state's lobbying disclosure law, for example, flatly exempts "an individual who does not receive economic consideration for lobbying," from its requirements. So just because John Verbanac pled with Jane Orie and other state legislators to see things the mayor's way on pensions, that doesn't make him a lobbyist. In theory, he could be acting just as a concerned citizen -- albeit a concerned citizen who doesn't actually live inside the city limits.

Similarly, the city's own lobbyist disclosure law defines a lobbyist as "any individual who is compensated to spent 30 or more hours in any consecutive three-month period engaged in lobbying activities [emphasis mine]." (As a side note: The city law wouldn't apply to the revelations in Acklin's e-mails in any case: The e-mails from 2006 through early 2008, and the disclosure law was only passed this spring.)

But of course, Verbanac wasn't always so selfless about the causes he fought for. In other e-mails turned over by Acklin's campaign, Verbanac pressures city officials to act favorably on behalf of his own projects. In a Febraruary 2008 e-mail, for example, Verbanac apparently wrote chief of staff Yarone Zober, asking about rumors the city would redirect $6 million in state money away from the old Hazelwood LTV site -- a project Verbanac was trying to develop.

"You know very well of our interest in the site," Verbanac wrote. "It cuts my legs totally out from underneath me, with my business partners, RIDC and a host of others."

Isn't that lobbying?

Not necessarily. People do, after all, have a right to plead their own interests. The state law, for example, "was very careful not to infringe on people's First Amendement rights," says Barry Kauffman, of the government watchdog group Common Cause.

If Verbanac was representing his own interests -- rather than being paid to represent someone else's -- Kauffman says this e-mail wouldn't count as lobbying under state law either. (In any case, the state law only applies to state officials, not municipalities.) Verbanac is the head of Summa Development, which sought to partner up with Forest City on the LTV site, and other projects too.

What separates Verbanac from a lobbyist? A lobbyist is someone who gets paid simply to make an argument, whether that argument succeeds or not. Verbanac, from all appearances, would only make a dollar if his argument carried the day. In his press conference yesterday, Acklin accused Verbanac of being "a lobbyist and corporate developer." But in fact, it's because Verbanac is a corporate developer that he may not have run afoul of the rules governing lobbysts.

So yeah, there's a paradox here. When he talks to Jane Orie about pensions, Verbanac remains outside lobbyist-disclosure laws because he has nothing at stake. When he talks to Yarone Zober about state tax incentives, he remains outside them because he has everything at stake -- his own business prospects.

Of course, it may look a hell of a lot like Verbanac is leveraging his influence with state officials to exert influence over city officials. But from the standpoint of ethics laws, Kauffman says there may not be much you can do about that.

So whatever else John Verbanac may be, he's a very smart guy, one especially adept at avoiding the public eye. In fact, Kaufmann himself was surprised to find that Verbanac's name never seems to crop up on campaign finance reports. (Which it doesn't -- one reason Verbanac's name has come up so rarely until now.) "I find it hard to believe a person of this cache isn't making donations," Kauffman told me. And it seems likely that Verbanac's activities probably fall outside the purview of lobbying-disclosure laws too.

What to do about that? "There's an old saying that the two most dangerous things in government are secrecy and money," Kauffman says. "And when they unite, dangerous things happen." But he adds that "Based on what you've told me, none of this sounds illegal. But whether what he's doing is a good thing or a bad thing? That's something voters can decide."